Recently Indian Hotel Ltd, a
group company of Tata Group is in news for all good reasons. Company came back
to black with good profitability and revenue number during March 2016 quarter
and it is expected that they will be coming out with extremely good number for
April-June 2016 quarter. The company equity price is trading around 131 INR
which takes its market capitalization of around $1.9 Bn with a debt level of
around $600. It is expected that the debt level will go down by 25% post Taj Boston sellout at $125 Mn and Samsara Properties Ltd sellout at $49.57 Mn. It
will help Indian Hotel to reduce the financing cost which will be EBIT positive
and subsequently higher EPS.
Indian Hotel Limited also changed
their strategy wherein they are going on asset light properties under
management contract rather than owning the properties. With the Indian and US
economy recovery wherein Indian Hotel Ltd owns or operate their maximum
properties under different brand name will be one of the major beneficial and
expected to beat the industry growth. Given the higher brand recognition,
Dividend payout and free hotel coupons which Indian hotel limited offer to its
customer investor should consider that they are paying 13% lower in longer
term. It is expected that by December 2016 Holiday season, the company equity
will be around 40 to 50% higher than the current prevailing price.
